Correlation Between CVW CleanTech and Southwest Gas
Can any of the company-specific risk be diversified away by investing in both CVW CleanTech and Southwest Gas at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CVW CleanTech and Southwest Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVW CleanTech and Southwest Gas Holdings, you can compare the effects of market volatilities on CVW CleanTech and Southwest Gas and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CVW CleanTech with a short position of Southwest Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVW CleanTech and Southwest Gas.
Diversification Opportunities for CVW CleanTech and Southwest Gas
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CVW and Southwest is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding CVW CleanTech and Southwest Gas Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Gas Holdings and CVW CleanTech is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CVW CleanTech are associated (or correlated) with Southwest Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southwest Gas Holdings has no effect on the direction of CVW CleanTech i.e., CVW CleanTech and Southwest Gas go up and down completely randomly.
Pair Corralation between CVW CleanTech and Southwest Gas
Assuming the 90 days horizon CVW CleanTech is expected to generate 5.73 times more return on investment than Southwest Gas. However, CVW CleanTech is 5.73 times more volatile than Southwest Gas Holdings. It trades about 0.05 of its potential returns per unit of risk. Southwest Gas Holdings is currently generating about 0.08 per unit of risk. If you would invest 44.00 in CVW CleanTech on September 2, 2024 and sell it today you would earn a total of 17.00 from holding CVW CleanTech or generate 38.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVW CleanTech vs. Southwest Gas Holdings
Performance |
| Timeline |
| CVW CleanTech |
| Southwest Gas Holdings |
CVW CleanTech and Southwest Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVW CleanTech and Southwest Gas
The main advantage of trading using opposite CVW CleanTech and Southwest Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVW CleanTech position performs unexpectedly, Southwest Gas can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Southwest Gas will offset losses from the drop in Southwest Gas' long position.| CVW CleanTech vs. Highway Holdings Limited | CVW CleanTech vs. Esperion Therapeutics | CVW CleanTech vs. Merit Medical Systems | CVW CleanTech vs. Cementos Pacasmayo SAA |
| Southwest Gas vs. NewJersey Resources | Southwest Gas vs. Northwest Natural Gas | Southwest Gas vs. NorthWestern | Southwest Gas vs. Chesapeake Utilities |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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